Business

How To Get A Shop Loan To Run Your Business

Short-Term Loans

Updated on August 22nd, 2018

If you are looking to start your own patisserie, designer clothes store or a beauty salon, it all begins with setting up your shop. A business in the right location with adequate space attracts customers and gets you started on a good note.

However, buying property can be a big expense, especially if you are beginning as a Small and Medium Enterprise (SME).

Physician Mortgage Loan

Arranging finance on your own is not always a viable option. To streamline processes and ensure that your business runs smoothly, you could look out for a loan. Banks and Non-Banking Financial Companies (NBFCs) offer a business loan for shop purchase. You can use this shop loan to buy a new property or renovate an existing one to expand your business.

Benefits of taking a shop loan

Collateral-free loan

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It is not necessary to pledge an asset as security when you apply for a shop loan. Most lenders now offer collateral-free loans to purchase a new premise or renovate existing infrastructure. NBFCs such as Bajaj Finserv provides up to Rs. 30 lakhs as a collateral-free loan for shop.

Quick application process

Getting a loan no longer has to be a time-consuming process. At Bajaj Finserv, you only have to submit two documents to kickstart your application process.

Instant approval

When you take a shop loan from Bajaj Finserv, you can choose from their pre-approved offers on business loans. This eases the process of availing the finance, making it simpler and convenient. It also offers pre-approved home loans, personal loans and other financial products for faster loan disbursal. Share your basic details and check out exciting pre-approved offers here.

If you’re considering a shop loan, here’s how you can increase your chances of getting it.

Have a good credit score

Sign-Up For A Physician Mortgage Loan

A good credit history and a high CIBIL score increases your chances of qualifying for a loan. It can help to clear pending dues or liabilities such as instalments or credit card bills, before you apply for the loan. A good credit score assures the lender that you will repay the loan.

Ready your net worth proofs and documents

Most banks ask for your net worth proofs such as your income tax returns, bank statements, assets etc. They could also ask for business related documents like Profit & Loss Account statements, balance sheets etc. Keep them ready along with your identity proof documents like your PAN card and address proof to hasten the process.

Have a strong business plan

A good business plan is a backbone to getting a business loan. Your business plan could provide the lender with a sense of surety that you’ll be profitable to pay off the shop loan in time. Be sure to carve out a good plan with a financial projection for the next three to five years to show your profit potential.

Keep your DSCR and NOI in check

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DSCR (Debt Service Coverage Ratio) is used to measure your capacity to repay the EMIs after you cover the rest of your expenses. DSCR of 1.0 is proof that you are capable of repaying the loan after covering all your expenses. Lenders are impressed with a high DSCR ratio.  Work on a DSCR of 1.25 or more to increase your chances of getting a loan.

Lenders are also interested in your NOI (Net Operating Income). If you subtract operating expenses from the total income, you get your NOI. The higher the NOI, the better are your chances of getting the loan sanctioned. This will convince the lender that you’ll have the funds to repay the loan. This will also determine your actual requirement of the shop loan.

Ensure you have a competent team

Some lenders are further interested in checking the credibility and efficiency of the management and team. A competent team ensures operational efficiency, which could translate into profitability and business longevity. This means lenders view your business successful enough for you to repay the loan.

Whether you apply for a shop loan from a bank or NBFC, all these factors can ease your chances of getting a loan. You can then apply for a loan at the branch office or online and get the process of getting shop loan started.